1. Overview of Third Party Verification of STS Transactions
Michael Osswald
STS Verification International GmbH ("SVI")
July 2019

2. Third Party Verification of STS Transactions
Executive Summary
Mission: As part of TSI Group, the mission of SVI is to contribute to a well developped, high quality and sustainable securitisation market in Europe and is dedicated to provide neutral and objective verification of STS criteria for ABS transactions
Application: SVI has been authorized by the competent authority pursuant to Art. 28 of the Securitisation Regulation (BaFin) to act as third party verification agent
Asset Classes: SVI covers Term ABS and ABCP transactions involving all asset classes that are potentially eligible for STS
Geographies: All countries of the EU
Know-how: Legal and economic know-how and long standing expertise of SVI staff and its outsourcing partners assure an accurate, efficient and transparent verification process
Supervision: SVI and its activities regarding third party verification (including terms, conditions and fee schedules) are supervised by BaFin as competent national authority

3. STS Verification as part of the ABS Process
Third Party Verification of STS Transactions
STS Verification as part of the ABS Process
STS Regulation (EU Law)
extensive regulation, for SVI relevant level 2 and 3 regulation:
regulatory agencies: EBA, ESMA, National Supervisory Authorities
Approval bodies: BaFin ESMA
Originator
independent
certification body
EDWH
securitisation register
Investor
4. Disclosure
5. Access
Disclosure
1. Mandate
3. Confirmation
2. verification
STS criteria:
originator
portfolio
transaction parties
transaction structure
transparency
SPV
True sale of Receivables
Issuance of ABS
ESMA website:
STS through notification
5. Access STS
Notification
4. STS Notification
Source: SVI

4. From Securitisation Regulation to Verification Report
Third Party Verification of STS Transactions
From Securitisation Regulation to Verification Report
Securitisation Regulation (EU) 2017/2402
STS criteria for non-ABCP (Articles ) and ABCP (Articles 23-26)
STS Notification according to Article 27
Third party verification agent according to Article 28
SVI Verification Manual
Documentation of the STS verification methodology used by SVI
Provides SVI management with discretion as to how each individual STS criterion is verified in a specific transaction
verification
Basis
for
Compliance
with
Deal
specific
SVI Verification Report
Confirms compliance of a specific transaction with the STS criteria and how SVI has come to such conclusion
Available as Preliminary (at deal announcement) or Final Verification Report (at closing) for Originator and Investors
international.com/transactions
SVI Transaction Verification Catalogue
When mandated by an originator, SVI management decides and documents the verification methodology and stipulates a transaction specific „Transaction Verification Catalogue”
Based on transaction information received from originator or arranger and complexity of proposed transaction
Deal
specific

5. Overview of the Contents of the STS Verification Process
Third Party Verification of STS Transactions
Overview of the Contents of the STS Verification Process
originator
portfolio
transactional
parties
transactional structure
transparency
Regulatory
framework
Eligibility criteria
Clear definition of responsibilities
Sale only to professional investors
Appropriate hedging of interest rate and currency risk
Provision of data to potential investors
Experience
Exclusion criteria
5% Retention
Clear description of the waterfall
Provision of all data in a repository
Exclusion of “Originate to Distribute”
Arrangements for replacement of parties
No Re-Securitisations
No withholding of funds in the event of insolvency
Examination of STS-Notification
Homogeneity
True sale
Presence of appropriate triggers
Investor Report Structure
Enforcement of sale of receivables in case of insolvency
No active portfolio management
Description of Servicing Standards
Provision of insider and other important events
Legal validity of contracts
Timely transfer
Replacement Counterparties
Provision of cash flow model
Assignability
No predominant dependence on portfolio sales
Clear conflict resolution regulations
Provision of environmental data

6. Indicative Timeline of a STS Verification
Third Party Verification of STS Transactions
Indicative Timeline of a STS Verification
t = 0 Application from originator to SVI
t + 5 Confirmation and mandate agreement to originator
t + 7 Signing of mandate agreement by originator
t + 8 Transaction verification catalogue to originator
t + 10 Start verification work
t + 15 Operations review at originator ('due diligence')
t + 30 (= Announcement) Preliminary verification report provided by SVI
t + 50 (= Closing) Final verification report provided by SVI

7. Added Value of the Third-Party Verification
Third Party Verification of STS Transactions
Added Value of the Third-Party Verification
Added Value for Originators:
Preparation phase: Third party verifier as first point of contact for questions and coordinated approach to the competent supervisory authorities
Implementation phase: Appropriate interpretation and consistent application of STS criteria (incl. RTS and guidelines)
On-going: These advantages also apply to ongoing transactions (consistent implementation, contact with the competent supervisory authority, reduction of liability risks).
Added Value for Investors:
Contribution to the uniform interpretation and application of the STS criteria throughout Europe.
Promoting confidence in the legally compliant application of the new Securitisation Regulation in general and the STS criteria in particular
Facilitates risk analysis and portfolio management

8. Contacts STS Verification International GmbH Mainzer Landstraße 61
60329 Frankfurt
Germany
Michael Osswald
Managing Director
Tel: +49 (0)
Prof Dr Michael Weller
Chairman of the Supervisory Board
Tel: +49 (0)
Jan-Peter Hülbert
Member of the Supervisory Board
Tel: +49 (0)
Prof Dr Arnd Verleger
Vice-Chairman of the Supervisory Board
Tel: +49 (0)
Mario Uhrmacher
Member of the Supervisory Board
Tel: +49 (0)